it officers direct, control and coordinate all activities without regard to locale, in the furtherance of the corporate objective." Scot Typewriter Co. v. Underwood Corp., 170 F. Supp. 862, 865 (S.D.N.Y. 1959). The "public impact" test designates as the principal place of business "the state in which a corporation has its most extensive contacts with, or greatest impact on, the general public." R.G. Barry Corp., 612 F.2d at 654.
Courts typically utilize the nerve center approach when corporate operations are spread across numerous states and the public impact test when corporate operations are more centralized. Id. In this case, the Court need not select which test is more appropriate because, under both tests, Casualty's principal place of business is in Tennessee. The geographical location of the substantial corporate activity for Casualty's business is in Chattanooga; that is, the location of its corporate operations. Diversity of citizenship, to be consonant with business reality, places Casualty's principal place of business in Tennessee.
The main argument plaintiff employs to indicate that Casualty's principal place of business is in New York is that Casualty derives approximately 83% of its premium revenues from policies covering the New York clients.
This figure expresses applications which are processed and accepted in Chattanooga and collected on by the Home Office, to which premiums are transmittd by the policy holders. Moreover, the fact that most of a company's sales originate through applications in one state does not make that state the company's principal place of business if the company's other primary functions, as herein, largely are based in another state. See Atkinson v. B.C.C. Associates, Inc., 1992 U.S. Dist. LEXIS 2824, 1992 WL 51568 at *3 (S.D.N.Y. 1992) (principal place of business of company that derived most of its revenue in New York was in Connecticut because the company's staff was based in Connecticut and its employees had little contact with New York residents).
Plaintiff relies on Inland Rubber Corp. v. Triple A Tire Service, Inc., 220 F. Supp. 490, 496 (S.D.N.Y. 1963) and R.G. Barry Corp. in support of his "percentage of revenue argument. Defendants respond correctly that these cases involve corporations that simply sold products such as tires and clothing in the locality involved and did not engage in the functions performed at the Home Office, as in this case, for example, investment of insurance premiums, claims administration, and underwriting, that constituted the significant and major components of Casualty's operations.
Casualty's "nerve center" is clearly in Chattanooga, since virtually all of its policymaking and substantive decisions are made at and by its Home Office.
Similarly, under the public impact approach, although Casualty interacts with New York residents through an initial approach to their broker representatives independent of Casualty, the more significant interaction takes place through personnel in Chattanooga rather than New York. Given (i) the broad operating functions of the Home Office; (ii) the lack of contact between applicants and policyholders and Casualty's employees in New York branch and district offices; (iii) the designation on the stationary and correspondence and in the disability policy of Casualty's Chattanooga address as the Company's Home Office; and (iv) the instruction in the disability policy that claims are to be sent to the Chattanooga office, Casualty's New York policyholders are on notice that they are dealing with an out-of-state corporation at its principal place of business. Diversity jurisdiction under these circumstances serves the purposes of the diversity statute:
Since the underlying reason for diversity jurisdiction is to protect out-of-state litigants from assumed local prejudices, Congress could perceive no reason to open the federal forum to an essentially local enterprise.
R.G. Barry, 612 F.2d at 654.
New York policyholders are on notice and necessarily must perceive from the foregoing that Casualty is based in and functions principally in Tennessee. Plaintiff held a similar perception of his employer as a corporation with its principal place of business outside of New York State. In a prior case involving these same parties, plaintiff himself pleaded in his complaint that Casualty's principal place of business was in Chattanooga; he averred:
Upon information and belief, Defendant Provident Life & Casualty . . . is a Tennessee corporation with its principal place of business located at One Fountain Square, Chattanooga, Tennessee and is a wholly-owned subsidiary of Provident Life and Accident.
Complaint at P 3 (Ellis v. Provident Life and Accident Insurance Co. and Provident Life and Casualty Insurance Co., 93 Civ. 2524). After this complaint was withdrawn for reasons unrelated to any diversity question, plaintiff brought another suit against these defendants based on alleged federal and state age employment discrimination. See Ellis v. Provident Life & Accident Insur. Co., 1995 U.S. Dist. LEXIS 10720, 1995 WL 453333 (S.D.N.Y.). In ruling on a summary judgment motion in that suit, Judge Keenan of this Court adopted the plaintiff's own views on Casualty's principal place of business. His opinion stated:
Defendants Provident Life & Accident Insurance Company . . . and Provident Life & Casualty Company . . . are private corporations that have their principal place of business at One Fountain Square, Chattanooga, Tennessee, 37402.